The Australian bonds gained modestly at the start of the trading week Monday ahead of the Reserve Bank of Australia’s (RBA) monetary policy decision, scheduled to be held on March 7. However, investors have largely shrugged off the upbeat reading of the country’s retail sales during the month of January.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, slipped nearly 1 basis point to 2.81 percent, the yield on 15-year note also fell nearly 1-1/2 basis points to 3.23 percent while the yield on short-term 2-year traded nearly 1/2 basis point lower at 1.84 percent by 03:50 GMT.

Australia’s nominal retail sales rose by 0.4 percent m/m in January, in line with market expectations and a recovery from soft results in November and December. In annual terms, retail sales were up 3.1 percent y/y in January.

However, in trend terms, retail sales slowed to 0.2 percent m/m in January (from 0.3 percent m/m in both November and December) but remained steady at 3.2 percent y/y.

“There is little sign of this dynamic changing anytime soon, in our view. Thus, while we think the RBA is most likely on hold we see the prospects of a rate cut in the next 12 months as much greater than those of a rate hike,” ANZ Research commented in its latest research report.